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Exchange Rate Policy and Liability Dollarization An Empirical Study

The paper identifies the contemporaneous relationship between exchange rate policy and liability dollarization using three different definitions of dollarization. The presence of endogeneity makes the empirical identification elusive. We use identification through heteroskedasticity to solve the end...

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Bibliographic Details
Main Author: Berkmen, Pelin
Other Authors: Cavallo, Eduardo
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2007
Series:IMF Working Papers
Subjects:
Monetary Policy
Government And The Monetary System
Payment Systems
Regimes
Exchange Rate Arrangements
Currency
Monetary Systems
Dollarization
Foreign Exchange
Development Planning And Policy: Trade Policy
Money And Monetary Policy
Money
Monetary Economics
Standards
Currencies
Exchange Rates
Foreign Exchange Policy
Factor Movement
Exchange Rate Policy
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:The paper identifies the contemporaneous relationship between exchange rate policy and liability dollarization using three different definitions of dollarization. The presence of endogeneity makes the empirical identification elusive. We use identification through heteroskedasticity to solve the endogeneity problem in the present context (Rigobon, 2003). While we find that countries with high liability dollarization (external, public, or financial) tend to be more actively involved in exchange rate stabilization operations, we do not find evidence that floating, by itself, promotes de-dollarization
Physical Description:47 pages
ISBN:9781451865974

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